Lenders often need guarantees for small business loans. And SBA loans generally require guarantees, although this requirement has been waived for small FDI loans linked to Covid-19. The EDI agreement requires any borrower who accepts a loan of more than $25,000 to have a comprehensive list of guarantees: “The security agreement will only grant a security interest for the property belonging to the borrower (company) and the UCC financing statement to establish, the company will identify the business only as a debtor, without the manager being signed on behalf of the company.” This problem with the personal guarantee language in the FDI contract can split like hair, but it shows how important it is to read credit contracts for small businesses before signing them. It`s not always easy or enjoyable, but it`s important. No legal expert? Most of us are not. So if you commit your business or yourself to repay thousands of dollars, it`s a good idea to have a small business lawyer who can help you review the agreement. The borrower certifies that “the collateral is exempt from any claim, any right of guarantee or security (unless expressly authorized by the secure party).” The FDI loan agreement (which you can read here in its entirety) currently stipulates that the SBA receives security interest for all guarantees that the borrower has at the time of the loan or the guarantees it acquires or creates in the future. The borrower must “grant the SBA, the insured party, a persistent security interest for and for all collaterals for loan amounts greater than US$25,000, the borrower must grant the insured party a persistent security interest for and for all “collaterals” as described above, in order to ensure the payment and execution of all debts , the borrower`s debts and obligations to SBB, including, but not exclusively, all interest, other expenses and expenses (hereafter referred to as “bonds”). The guarantee includes the following assets that the borrower now owns or must acquire or acquire immediately after the acquisition or creation of these assets: all tangible and intangible assets, including: a) inventory, b) equipment, c) instruments, including debt (d) chat paper, including tangible chat paper and electronic chat paper , (e) documents, (f) , including claims on health insurance and credit cards, (i) illicit commercial claims, (j) general intangible assets, including intangible payments and software, and (k) security extracted, since such conditions may be defined from time to time in the single trade code. The security interests granted by the borrower include all memberships, foreclosures, accessories, parts, supplies and replacement services for assets, all products, products and collections, as well as all related records and data.” In signing the FDI loan agreement, the borrower requires the borrower to accept the non-allocation of assets: given the uncertainty of the current business environment, it is not surprising that borrowers are concerned about what happens if they cannot repay their EIDL SBA loans.